Australia led the eventing after Christopher Burton rode a fast and clean round on a cross country course full of falls, refusals and time penalties.
Defending champions Germany dropped from first after dressage to fourth in team standings on Monday though Michael Jung, who took home individual gold four years ago, is in second place behind Burton.
"I took a few long routes because this is a difficult course... but he is so fast!" said Burton, 34, one of only three horse and rider pairs to escape penalties.
"I was not expecting this, he has far and above exceeded our expectations," he said of his horse Santano II who had never jumped an elite four-star course before.
Burton's performance helped pull Australia ahead of New Zealand and France. Medals will be awarded on Tuesday after show jumping, the third and final phase of eventing.
Five-time Olympian William Fox-Pitt of Great Britain led after the dressage phase but on Monday missed a tight turn and had a refusal at a brush fence, dropping to 22nd. Fox-Pitt made a miraculous recovery from an ugly fall that had him in a medically induced coma just eight months ago.
Eighteen of 65 horse and rider pairs were eliminated or withdrew on Monday, five with falls on what several riders said was the most difficult course they had ever ridden. Two falls early in the competition caused many teams to adjust their strategies.
"They told me to take it really safe," said Mark Todd, who at 60 is attending his seventh Olympics, after team mate Tim Price fell.
"I thought we were going to make it (within the time allowed) but there were just so many jumps at the end," said Todd, who had two time penalties and finished fourth.
A combination of tight turns through water near the end of the five-kilometer course saw many horses balk, and Olympic veterans Ingrid Klimke of Germany, Australia's Shane Rose and Pippa Funnell of Great Britain all had refusals there.
"It was a lot of run-outs and dramatic things," said course designer Pierre Michelet. "Some were riders we were not expecting."
The U.S. had one rider withdraw and one eliminated, knocking the team into 12th place ahead of Russia, which finished last.
Full Team Results HERE